Does green technology innovation matter to the cost of equity capital?

Elmawazini, Khaled; Chkir, Imed; Mrad, Fatma; Rjiba, Hatem

doi:10.1016/j.ribaf.2022.101735

Cited by 22 publications

(12 citation statements)

References 42 publications

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“…We, therefore, find support for H1. Our findings are consistent with the findings of Elmawazini et al. (2022) who also document a negative relationship between green technologies and the cost of capital.…”

Section: Resultssupporting

confidence: 92%

“…We, therefore, find support for H1. Our findings are consistent with the findings of Elmawazini et al (2022) who also document a negative relationship between green technologies and the cost of capital. Our results could be consistent with both the shareholders' risk perspective as well as shareholder base perspective.…”

Section: Regression Resultssupporting

confidence: 92%

“…A heterogeneous investor base enables firms to diversify its risk and the literature suggests that efficient risk-sharing among a larger pool of capital providers leads to a lower cost of capital (Dhaliwal et al, 2011;Wang et al, 2013). Companies may attract ethical investors by establishing a good image of themselves as environment-friendly firms through engaging in green innovation activities (El Ghoul et al, 2011;Elmawazini et al, 2022). When investors observe these firms and decide to invest in them, due to the effective risk sharing such investors are likely to expect less returns on their investments in green-innovative firms, thus reducing the cost of equity of green firms.…”

Section: Green Innovation and The Cost Of Equity Capitalmentioning

confidence: 99%

“…Third, by documenting the moderating role of financial constraints, EPU and the internal control environment on the association between green innovation and the cost of equity capital, we enrich the theoretical arguments on how green innovation relates to cost of equity capital: a finding yet to be documented in the literature (e.g. Elmawazini et al, 2022).…”

Section: Introductionmentioning

confidence: 97%

“…First, the investors base perspective suggests that a diversified investor base enables firms to attract public financing because a pool of heterogeneous investor base with different risk preferences and trading motives is a precursor for optimum funding sources. Companies may attract ethical investors by establishing a good image of themselves as environmental-friendly firms through engaging in green innovation activities (El Ghoul, Guedhami, Kwok, & Mishra, 2011; Elmawazini, Chkir, Mrad, & Rjiba, 2022). Such investors are likely to expect less returns on their investments in green-innovative firms, thus reducing the cost of equity of green firms.…”

Section: Introductionmentioning

confidence: 99%

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Green innovation and the cost of equity: evidence from China

Alkebsee

Habib

2023

CAFR

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PurposeThis paper aims to examine the association between green innovation and the cost of equity in China. This study relies on the investors’ base perspective and shareholders’ perceived risk perspective to investigate the relation between green innovation and the cost of equity in China.Design/methodology/approachThe paper uses firm fixed effects regression for a sample of Chinese public companies for the period 2008–2018.FindingsThe authors find a negative relationship between green innovation and the cost of equity capital. This negative association is found to be more pronounced for less financially constrained firms, during periods of high economic policy uncertainty, and for firms with a strong internal control environment. Finally, the paper shows that the negative association became more pronounced after the passage of the Environmental Protection Law of China in 2012. The results remain robust to possible endogeneity concerns.Originality/valueThis study contributes to the green innovation literature by documenting that shareholders favorably view firms implementing green innovation policies. The study also has policy implications for Chinese regulators in improving the green credit policy.

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Section: Resultssupporting

confidence: 92%

Section: Regression Resultssupporting

confidence: 92%

Section: Green Innovation and The Cost Of Equity Capitalmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 97%

Section: Introductionmentioning

confidence: 99%

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Green innovation and the cost of equity: evidence from China

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2023

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Artificial intelligence (AI)‐driven strategic business model innovations in small‐ and medium‐sized enterprises. Insights on technological and strategic enablers for carbon neutral businesses

Shaik,

Alshibani,

Jain

et al. 2023

Bus Strat Env

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This study investigates the enhancement of technological and strategic enablers for carbon‐neutral businesses (CNB) through artificial intelligence (AI)‐driven business model innovation (AIDBMI). Drawing upon the insights gained from the literature review, the study employs structural equation modeling (partial least squares structural equation modeling [PLS‐SEM]) as the methodology to examine the relationships between AIDBMI, technological enablers, strategic enablers, and the attainment of carbon neutrality. The sample size consists of 326 small‐ and medium‐sized enterprises (SMEs) in the United States of America. The findings of this study affirm the significant positive relationships between AIDBMI and both technological and strategic enablers for CNB. The utilization of AI technologies proves to be instrumental in fostering the development and implementation of innovative business models that integrate sustainability practices and address environmental challenges. By leveraging AIDBMI, SMEs can harness technological advancements to adopt energy‐efficient processes, embrace renewable energy solutions, and implement effective carbon reduction strategies. Moreover, the study highlights the critical role of strategic enablers in driving the transition towards carbon neutrality. The alignment of sustainability goals with organizational strategies, stakeholder collaboration, and employee engagement emerge as pivotal factors in enabling SMEs to effectively utilize AIDBMI and leverage technological advancements to achieve carbon neutrality. The implications of this study contribute to the existing literature by highlighting the importance of technological and strategic enablers in creating CNB. By integrating AIDBMI, organizations can drive sustainable transformations, optimize their operations, and align their resource management with sustainable practices. These insights provide valuable guidance for SMEs, policymakers, and researchers seeking to foster sustainable practices, promote carbon neutrality, and contribute to the advancement of a low‐carbon economy.

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How does Chinese-style fiscal decentralization affect green technology innovation?

Guan

et al. 2023

Environ Sci Pollut Res

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Does green technology innovation matter to the cost of equity capital?

Cited by 22 publications

References 42 publications

Green innovation and the cost of equity: evidence from China

Green innovation and the cost of equity: evidence from China

Artificial intelligence (AI)‐driven strategic business model innovations in small‐ and medium‐sized enterprises. Insights on technological and strategic enablers for carbon neutral businesses

How does Chinese-style fiscal decentralization affect green technology innovation?

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